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Carrier WiFi

Boingo VCs Spring for $10M

Wireless LAN network aggregator Boingo Wireless Inc. announced today that it has raised a second round of financing worth $10 million, bringing its total raised to date to $30 million. It expects the funds to see it through to 2006 (see Boingo Lands $10M).

Boingo (named by its founder Sky Dayton who also founded EarthLink) will use the extra capital to continue the growth of its WLAN (or WiFi) network in the U.S. and internationally. The company plans to announce two European carriers that are using its software to link up hotspots in Europe at Telecom World 2003 in Geneva next week. Vodafone Group plc (NYSE: VOD), an advocate of the partnership approach to building hotspot networks, is thought to be a likely candidate (see Voodoo's Hotspot DoubleUp).

What’s Boingo’s appeal? Basically the company sells three pieces of software: a client that enables end users to search and obtain a signal, plus two pieces of back-end software that work on the carrier side -- one part that enables users to roam seamlessly among hotspots, and a second component that ensures they get a bill from just one service provider.

It has packaged these pieces together in what it calls a platform services offering, which it claims provides a complete private-label wireless LAN network in a box for carriers looking to get a foot up in this market.

”In order for WiFi services to be mainstream there has to be 2 million hotspots in the U.S. for complete coverage,” says a spokesperson for Boingo. "There are less than 10,000 today but the best way to get to 2 million is aggregating networks together."

The only potential kink in the plan is that not everyone is partnering with Boingo to get there. AT&T Wireless Services Inc. (NYSE: AWE), for instance, chose to partner with Wayport Inc., Boingo’s biggest rival. Boingo’s current service provider partners include Earthlink, Fiberlink Communications Corp., and T-Mobile USA. It’s worth noting that Boingo also competes with T-Mobile: Both have about the same number of hotspots in the U.S -- about 2,600 each -- and the race is on to see who can create the broadest coverage first (see AT&T's Hotspot High Noon).

In addition to other WLAN providers, Boingo also faces competition from next-generation high-speed cellular data services, like Verizon Communications Inc.'s (NYSE: VZ) recent EV-DO (evolution data optimized) rollout in San Diego and Washington. Analysts say WiFi services will have to work seamlessly with such cellular services to ever attain Boingo’s dream of mainstream adoption (see Verizon Wireless Catches Data Wave).

For now at least, Boingo has the funding to pursue this goal. The lead investor for the round was Mitsui & Co. Venture Partners, based in New York City, which is the venture arm of Mitsui & Co. Ltd. of Tokyo. Mark (Masami) Kawahara, a Mitsui investment partner, will join Boingo’s board of directors. Other new investors in the round include Infonet Services Corp. (NYSE: IN), and Amerindo Investment Advisors Inc. Boingo’s original financial investors, New Enterprise Associates (NEA), Sternhill Partners, and Evercore Ventures, also participated in the round.

— Jo Maitland, Senior Editor, Boardwatch

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